Editorial: Best N.J. economic incentive is still tax reform

Walk down any main street in any town or city in the state and you’ll see concrete evidence of New Jersey’s economic rut.

Take a good, long look at the boarded up storefronts, the empty parking lots, the few remaining shops. Drive out to the older refinery districts or the newer industrial parks and watch the lights go dim.

Four years into a so-called recovery from the Great Recession, New Jersey is far from recovered. Job growth is stagnant, employment rates are dismal, and tax receipts often fall below expectations. Besides, the flight of business and industry from the Garden State started years, even decades, before the recent recession.

We all know the reasons. Despite earlier attempts from Trenton to offer incentives, what business would want to remain in a state with the nation’s highest per capita tax rate as well as some of the highest energy and insurance costs?

Now, lawmakers have another measure to put people back to work and get the state on stronger economic ground. Dubbed the New Jersey Economic Opportunity Act of 2013, the controversial measure, now passed by both houses of the Legislature, would restructure and consolidate the state’s five major tax incentive programs into two broad categories — incentives for redevelopment, which primarily target older urban areas, and the various incentive programs focused on business creation or retention. The bill puts no cap on the total amount the state could award, although individual businesses would be limited.

Last week, the Senate overwhelmingly passed the measure, though it had sashayed around the Statehouse for months. It awaits what is expected to be a conditional veto from Gov. Chris Christie. As it stands, the bill does have merit — it would make incentives more available to small businesses as well as to those in non-urban areas, and it sets a lower threshold for qualifying businesses in South Jersey. Parochially speaking, that’s good for us, and based on a claim that past programs didn’t give our region a fair cut. From a statewide perspective, of course, the bill has been larded with goodies for one portion of the state.

The measure would also award tax credits for residential development with affordable housing, something that critics say runs counter to the original intent of the bill. An amendment requiring developers to include such housing to get the credits has angered main Senate bill sponsor Ray Lesniak, D-Union. He says it would drive up housing prices in urban areas and keep middle-class people from moving in.

We’ve seen this before: Trenton offers piecemeal incentives to business and industry, but fails to address the root cause of economic malaise. Without property tax reform, without a competitive economic climate for business owners and their employees, why would they settle in New Jersey?